Highest ever quarterly financial performance, Reliance Industries

26 Jul '11

6 min read

Arab light - heavy differential for 1Q FY12 improved to $ 5.1/bbl as compared to $ 2.7/bbl in the same quarter last year. This significant change can be attributed to strong demand for light products, continued supply disruption in Libya and increased supply (of mainly heavy-sour) crude from Saudi Arabia.

Asian gasoil cracks continued to remain strong on the back of robust demand from the power sector in China and the supply disruptions following on from the aftermath of the natural disasters in Japan. In Asia, gasoil crack for the quarter was at $ 19.5/bbl which was significantly higher than the $ 11.4/bbl for the quarter ending June 2010.

Increased sales of personal automobiles in developing Asia as well as tightness in US gasoline stock which opened the arbitrage to the West from Asia resulted in gasoline cracks improving to $14.3/ bbl vis-à-vis $9.4/bbl in 1Q FY10.

Naphtha cracks weakened during the quarter due to cracker maintenance & unplanned outages and impact of shutdown in Japan. Naphtha cracks for the quarter were lower at $ (-) 2.2 / bbl as compared to $ (-) 0.2 / bbl in 4Q FY11 and $ (-) 0.5/bbl in 1Q FY11.
Revenue for the segment increased by 45.8% from ` 50,531 crore to ` 73,689 crore ($ 16.5 billion). Increase in volumes accounted for 6.5% growth in revenue while higher prices accounted for 39.4% growth in revenue.

Exports of refined products were $ 10.2 billion as against $ 6.3 billion in 1Q FY11. This was accounted for by about 10.37 million tonnes of product. Asia continues to remain the largest export destination due to strong demand and increased economic activity in the region.

EBIT for the refining business was at ` 3,199 crore ($ 716 million), an increase of 57.2% on a year-on-year basis. EBIT margin increased to 4.3% as compared to 4.0% in 1Q FY11 due to higher refining margins.

During the quarter ended 30th June 2011, revenue for the segment increased by 32.1% from ` 13,903 crore to ` 18,366 crore ($ 4.1 billion). Increase in volume accounted for 6.5% growth in revenue and higher prices accounted for 25.6% growth in revenue.

EBIT margins for the quarter ended 30th June 2011 were at 12.1% as compared to 14.8% in 1Q FY11 due to base effect of higher revenues. On a trailing quarter basis, EBIT margins were lower due to negative impact of margin contraction in Polyester & Polymer chains which was partially offset by higher margins in PVC, PET, Butadiene and LAB.

Production of polymer products (PE, PP and PVC) increased to 1.1 million tonnes, an increase of 17% on a year-on-year basis. This increase was due to full operations during the quarter as against planned turnarounds during 1Q FY11.

Production of fibre intermediates (PX, PTA and MEG) increased to 1.2 million tonnes, an increase of 12% on a year-on-year basis. Production of polyester products (POY, PSF and PET) volume decreased marginally to 411 thousand tonnes due to marginal changes in the product mix. RIL has maintained its focus on specialty products which accounted for 53% of PSF and 45% of PFY production.

Domestic demand for polyester products decreased by 5% during the quarter on account of price volatility and labour & power shortage at the downstream industry. Polymer products demand also decreased by 4% during the quarter.

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Reliance Industries Limited (RIL)

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